The Ministry of Finance is proposing to amend many regulations to remove problems for enterprises where the State holds more than 50% of charter capital. Accordingly, the remaining profits are distributed as dividends to shareholders in two ways, in cash or in shares. Besides, state-owned enterprises are allowed to divest capital from loss-making enterprises…

Currently, the Ministry of Finance is developing a draft Decree amending and supplementing a number of articles of Decree 91/2015/ND-CP dated October 13, 2015 on state capital investment in enterprises and management and use. Capital and assets at enterprises have been amended and supplemented in Decree No. 32/2018/ND-CP dated March 8, 2018 of the Government and Decree No. 140/2020/ND-CP dated November 30/ 2020 of the Government and collect opinions from affected subjects.

Compared to current regulations, the draft amends and supplements regulations on after-tax profit distribution; Divesting capital in enterprises does not ensure business operations… It is expected that the document will affect state-owned enterprises.

ENCOUNTERING DIFFICULTIES DUE TO UNABLE TO DIVEST CAPITAL FROM LOSING BUSINESSES

According to the draft report submitted to the Government on the draft decree, the Ministry of Finance believes that enterprises with 50% or more charter capital held by the State cannot implement divestment in enterprises that are suffering losses or accumulated losses. , affecting the investment capital of enterprises.

The Ministry of Finance cited the mechanism problems from the case of Vietnam Airlines Corporation – Joint Stock Company (Vietnam Airlines). One of the contents in the overall project of solutions to overcome difficulties for Vietnam Airlines to overcome the crisis caused by the impact of the Covid-19 epidemic is to have a solution to divest capital at Pacific Airlines Joint Stock Company (PA). ).

Furthermore, enterprises in which 50% or more of charter capital is held by the State cannot divest capital from enterprises that are suffering losses or accumulated losses, affecting the investment capital of the enterprise.

According to the draft report, the Ministry of Finance said that through reports and instructions, the Capital Management Committee has directed the representative of state capital at Vietnam Airlines to amend and supplement the company’s charter to Implement the process of divestment of investment capital in other enterprises according to regulations with 3 methods including: public auction; If the public auction is not successful, then a competitive offer will be made; If the competitive offer is not successful, it will be carried out by agreement.

However, the implementation of the public auction method could not be implemented due to problems with relevant regulations at Point b, Clause 1, Article 15 of the Securities Law 2019: “… 1. Conditions for initial public offering of shares The assets of a joint stock company include:  b) The business activities of 02 consecutive years immediately preceding the year of registration for offering must be profitable, and at the same time have no accumulated losses up to the year of registration for offering”.

Because since the early 2000s, Pacific Airlines’ business results have continuously suffered losses. In 2022, Pacific Airlines continues to record a pre-tax profit loss of VND 2,096 billion.

After many unsuccessful restructurings, Australian national airline Qantas Group chose to withdraw and donate 30% of its shares in Pacific Airlines to Vietnam Airlines. To date, Vietnam Airlines holds 98% of Pacific Airlines shares.

From the above problems, the Ministry of Finance believes that it is necessary to amend Decree 91 to remove problems and build a legal basis for enterprises with more than 50% of charter capital held by the State to divest capital in Vietnam. Other businesses suffered losses or had accumulated losses.

Accordingly, the draft supplements regulations, in case of divestment from a joint stock company with more than 50% of the charter capital of an enterprise in which the State holds more than 50% of charter capital and that joint stock company does not ensure the business operations of the company. For 2 consecutive years preceding the year of divestment, there must be a profit and no accumulated losses up to the year of divestment. The owner’s representative agency shall direct the representative of the selected state capital portion. The transfer of shares in that joint stock company is as prescribed in Clause 2, Article 127 of the Law on Enterprises 2020.

The order, procedures, and authority to divest capital comply with the law on management and use of state capital invested in production and business at enterprises.

PROBLEMS WITH REGULATIONS ON PAYING DIVIDENDS IN CASH

Also in this report, the Ministry of Finance said that the Committee for Management of State Capital at Enterprises and the Airports Corporation – Joint Stock Company (ACV) have issued official dispatches on the distribution of after-tax profits according to regulations.

In particular, the Capital Management Committee proposed to allow ACV to pay dividends in shares to help ACV increase its own capital and implement important national projects and large projects such as: Port project. Long Thanh International Airport, passenger terminal T3 of Tan Son Nhat International Airport, expansion of terminal T2 of Noi Bai International Airport…

Because if implemented according to old regulations, ACV will not meet the existing capital needs to ensure timely completion of investment and construction, especially the Long Thanh International Airport project phase 1 must be completed and put into operation by 2025.

In this case, ACV will have to borrow from credit institutions, leading to increased risks in investment activities, reduced project efficiency and reduced operational efficiency of ACV.

Current regulations clearly state: ” For enterprises with shares or contributed capital in which the State holds more than 50% of charter capital or the total number of shares with voting rights, the plan for dividend distribution and profit after tax is years are distributed in the following order:

…+ The remaining profits are distributed in full as dividends and profits in cash to shareholders and capital contributing members. Dividends and profits are divided in cash for the state capital contributed to the enterprise and paid into the state budget according to regulations .

To solve this problem, the Ministry of Finance proposed to develop a draft Decree amending and supplementing a number of articles of Decree 91 focusing on: regulations for enterprises that are joint stock companies held by the State. hold more than 50% of charter capital or total voting shares, the remaining profits are distributed as dividends to shareholders in cash or shares.

“Distributing dividends in shares is only applicable to joint stock companies implementing important national projects approved by competent authorities and approved by the Prime Minister to pay dividends in shares”, The Ministry of Finance stated clearly.